Ted Cruz Demands $200B Tax Cut Without Congress Ahead of 2026
Republican Sens. Ted Cruz of Texas and Tim Scott of South Carolina are urging the Treasury Department to approve a roughly $200 billion capital gains tax cut without congressional approval, escalating a debate over executive power and election-year economics.
The move comes as Republicans work to strengthen their economic message ahead of the 2026 midterm elections, where voter sentiment on inflation and growth is expected to be decisive.
According to The Washington Post, Cruz and Scott sent a letter asking Treasury to “index” capital gains for inflation, which would lower taxable gains when investors sell assets. The senators argue Treasury has administrative authority to make the change without new legislation.
That claim faces legal uncertainty. A 1992 Justice Department opinion concluded Treasury does not have authority to index capital gains absent congressional action, raising the possibility of court challenges if the department moves forward.
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Cruz and Scott wrote that Treasury has “clear authority” to act under existing tax law.
If implemented, the proposal would significantly reduce tax liabilities for investors. However, past modeling from the Penn Wharton Budget Model found similar indexing proposals would direct the vast majority of benefits to top earners, with more than 80% flowing to the top 1%.
The debate could reshape the economic messaging battle heading into 2026, particularly as Republicans attempt to counter Democratic attacks that GOP tax policies favor the wealthy.
Treasury has not publicly indicated whether it will act on the request, and any decision could face swift legal scrutiny.
For now, the proposal signals how central tax policy may become in the next phase of the midterm fight.
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